Excessive Compensation Paid to Executives
Fee Rate Reduction and Fines Under Review
Copyright management organizations such as the Korea Music Copyright Association and the Korea Music Performers' Union have been found to have failed to comply with the Ministry of Culture, Sports and Tourism's corrective orders regarding executive compensation. Since 2016, the Ministry has issued recommendations and orders to address issues of reckless management. In particular, last year, it investigated the status of executive compensation and member welfare budgets across all copyright organizations and imposed corrective orders based on the findings.
According to the Ministry on the 8th, some copyright organizations still paid excessive compensation to executives using fees collected from members. In the case of the Korea Music Copyright Association, the budget paid to the president last year amounted to 343 million KRW, including 108 million KRW in salary, 177 million KRW in business promotion expenses, and 58 million KRW in travel expenses. In March, the salary was increased by 79% to 193 million KRW. The Ministry pointed out, "Although business promotion expenses were reduced from 20 million KRW to 15 million KRW per month, this level is still exceptional compared to similar public institutions."
The Korea Music Copyright Association also did not comply with the corrective order to set a cap on meeting fees paid to non-executive directors. Last year, the average meeting fee per non-executive director was 30 million KRW. One director received as much as 48.7 million KRW.
The Korea Music Performers' Union also rejected the corrective orders and increased the compensation and allowances paid to executives. In particular, the executive director's salary was raised by 32% from 157 million KRW last year to 208 million KRW. The base salary was increased from 7 million KRW to 9.5 million KRW per month, the position allowance from 2 million KRW to 2.5 million KRW per month, and vacation pay from 18.9 million KRW to 25 million KRW annually. The Ministry explained, "During the 2023 work inspection, the excessively increased compensation was pointed out and correction was requested, but the same issue is recurring."
The Korea Music Performers' Union also paid non-executive and outside directors 2 million KRW and 1 million KRW per person quarterly, respectively. The articles of association specify that compensation or allowances cannot be paid to executives other than the president and executive director. The issue was also confirmed at the Korea Broadcasting Performers' Rights Association, where the non-executive chairman's dignity maintenance expenses were increased from 7 million KRW to 8.3 million KRW per month.
The Ministry of Culture, Sports and Tourism plans to reissue corrective orders and is considering reducing fee rates and imposing fines on the Korea Music Copyright Association and the Korea Music Performers' Union. It is also promoting amendments to the enforcement decree of the Copyright Act to mandate disclosure of the total amount and detailed breakdown of compensation, allowances, and business promotion expenses received by individual executives from copyright organizations. An official stated, "We are also considering reforming the copyright centralized management system to ensure that copyright organizations operate with the creators' interests as the top priority."
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